Mondelez is the second-largest confectionary company in the world, trailing Mars – Hershey is the fifth biggest, but a merger would put the new combined entity in top place.
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Shares in Hershey were down almost 12% at $98.60 in after-hours trading in NY following the news. Mondelez’s shares, on the other hand, rose 3% as investors seemed happy with the development.
A charitable trust controls 81 percent of Hershey’s voting shares and funds a charitable school for disadvantaged kids.
Although Mondelez said that it would project the jobs of Hershey’s employees, move its chocolate headquarters to Hershey, Pennsylvania and rename the company Hershey’s, apparently the deal just wasn’t sweet enough for right now.
The proposed tie-up would have created a major global snacking giant with US$37 billion in annual sales and could have combined Mondelez’s Nabisco, Oreo and Cadbury brands with Hershey’s namesake chocolates, Reese’s, and Kisses sweets.
Hershey shares slid 11 percent in after-hours trading, to $99.
The snackmaker had reportedly raised its offer for Hershey to $115 a share last week.
Investors seemed to welcome the end of the months-long play by the Oreo maker, with Mondelez shares closing up 4% on Tuesday.
But hopes for any merger between Mondelez and Hershey seemed to die this afternoon with Rosenfeld’s statement.
Stock dividends from the nation’s largest chocolate company help pay for expenses at the 2,000-student Milton Hershey School. The Hershey Trust owns the vast majority of Hershey’s votes and has been unwilling to sell in the past. But she added, “I can confirm our understanding that Mondelez is no longer pursuing a combination with Hershey”. In July, the trust said a board member was resigning.
Mondelez brands include Cadbury chocolate and Trident chewing gum.
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Hershey’s board on June 30 rejected a $23 billion purchase proposal from Mondelez, and the Dauphin County candy company has never said anything further about the pitch.
